14 April 2009

THE WRONG TEA

There is a groundswell of enthusiastic activism for the various “tea parties”’ taking place around the country on April 15, which of course is the federal income tax deadline. I recall the atmosphere of such undertakings going back decades. What they do mostly is allow the committed to feel as though they are doing something about an issue they care about. But the policy consequences aren’t all that clear. The administration in power will simply look out and decide “those aren’t our voters.” This is not meant to discourage such activities, which by all means should take place, but the consequences beyond feeling good are likely to be muted, particularly because April 15 represents the wrong tax.

As it stands now barely half the population pays any income tax, which limits how much traction the issue can have. There is however, a good deal of resentment about “taxes,” generally. For most people the federal income tax is the least onerous tax they pay. Where they primarily get hit is with state and local taxes. For most people who pay taxes the single most burdensome levy is the property tax, which is a local tax. This is mitigated for some by the fact that it is deductible from federal taxes, but in terms of sheer dollars this is the biggest single tax for homeowners of modest means. That, along with other state fees and taxes, is where the real burden lies. Thus to be effective anti-tax efforts should focus on the most objectionable taxes most people actually pay, which are in fact local. The good news is that tax protest at this level is likely to be more effective.